Indiana’s consumer advocate asked utility regulators on July 7 to reconsider their approval of a $71 million rate increase for AES Indiana in an effort to address residents’ soaring electricity bills.
The Indiana Utility Regulatory Commission authorized the increase in June, granting AES less than half of the $192 million boost that it had initially requested. But earlier the Office of Utility Consumer Counselor, the state agency representing utility consumers, had asked the IURC to cap AES’s annual revenue at $21 million less than the previous level.
A day after the IURC decision, Braun slammed it as “unacceptable” in a statement and wrote that he had asked the OUCC to petition for a rehearing of the case. Abby Gray, the office’s chief, said in the statement that her staff would “work diligently” to craft a filing.
In the July 7 petition, the OUCC didn’t put a number on how much less AES should earn each year. But OUCC lawyers argued that the IURC overestimated AES’s costs and improperly allowed the utility to pass certain expenses on to consumers.
In some cases, the OUCC said, the IURC forecast AES’s costs by looking at past spending, when it should instead have encouraged the utility to tighten its belt.
“Insofar as AES Indiana justified its revenue requests by claiming they were consistent with what AES Indiana has historically spent, that’s a problem,” OUCC lawyers wrote. “That mindset perpetuates the rate affordability crisis instead of affirmatively tackling its resolution.”
The IURC’s estimate for the cost of decommissioning power plants was too high, the OUCC argued. An estimate presented by an OUCC expert witness earlier in the proceedings would have saved consumers $10 million in comparison.
The OUCC also argued that the rate increase authorized an overly high return on equity for AES. The IURC determined that a reasonable return on equity would be between 9.1% and 9.9% and then authorized a 9.5% return.
Affordability concerns should have pushed the commission to approve a number on the lower end of its range, or else publicly justify why it allowed a higher return, OUCC lawyers argued.
The OUCC also said that authorizing a 9.1% return on equity would appropriately penalize AES for billing issues that plagued 65,000 customers after the utility adopted a new online billing system in 2023.
OUCC lawyers also claimed that the IURC improperly allowed AES to put ratepayers on the hook for costs related to the rate case. Regulators erred by allowing AES to include costs related to an expert witness who suggested it should be allowed to earn a return on equity between 10.2% and 11.2% each year, the OUCC said.
Because AES’s finding was so much higher than what the IURC deemed reasonable, “only AES Indiana’s shareholders, not its ratepayers, could benefit” from the higher estimate, OUCC lawyers wrote — meaning that consumers shouldn’t be charged for the cost of producing it.
The $71 million approved rate increase would also make consumers pay for the estimated salaries of vacant positions that AES may not actually plan to fill, the OUCC argued in the petition.
“Ratepayers have been bankrolling and AES Indiana has been recovering millions of dollars in compensation and expenses for 100-plus vacant positions since rates were approved” in the utility’s last rate case in 2024, OUCC lawyers wrote.
The IURC also approved a high estimate for the base cost of fuel without providing sufficient justification, the OUCC argued.
In a statement, an AES spokesperson said the firm was reviewing the petition.
“As always, our mission is to provide safe, reliable, and affordable electric service to our more than 530,000 customers across Central Indiana,” the AES statement said.
The battle over the AES rate increase takes place as electricity costs rise for consumers. Where a typical electricity bill would have been $126 in July 2023 for a household using 1000 kilowatt hours per month, that same household would have paid $158 in July 2025.
This summer, Indianapolis households will see higher electricity costs because of a temporary surcharge that allows AES to recover higher fuel costs during last winter’s storms.
The panel considering the OUCC’s petition could look different from the one that decided the AES rate case in June. Shortly after the AES rate case was decided, Braun replaced the IURC’s chair. Another member of the commission announced his intent to resign by Aug. 31, without giving a public explanation.
Anthony Swinger, who now chairs the IURC, recused himself from the AES rate case because he worked on it while he was a staff member at the OUCC.
Tilly Robinson is a Pulliam fellow for the Indianapolis Star. She can be reached at tilly.robinson@indystar.com.
This article originally appeared on Indianapolis Star: State agency asks utility regulators to reconsider AES rate increase
Reporting by Tilly Robinson, Indianapolis Star / Indianapolis Star
USA TODAY Network via Reuters Connect
By Tilly Robinson, Indianapolis Star | USA TODAY Network
